Introduction

The Strata Legislation Amendment Bill 2023, introduced to the NSW Parliament on 12 October 2023, marks a significant step in ongoing efforts by the NSW government to reform strata living. This bill, which quickly passed through the NSW Legislative Council and is currently under review by the Legislative Assembly, is part of a broader tranche of upcoming reforms in 2024, including the Building Legislation Amendment Bill 2023. This bill, which implements 31 recommendations from the 2021 statutory review of the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015, aims to enhance the governance, accountability, and effectiveness of strata buildings.

The focus of this article is on the strata reforms introduced to The Strata Schemes Management Act 2015 and its 2016 Regulation. These proposed changes to strata schemes are expected to have a substantial impact on their management and regulation, reflecting the government’s commitment to improving industry practices and protecting the interests of consumers and stakeholders in the strata sector. As these changes to the strata schemes progress, they promise to bring about significant improvements in the quality and safety of building and construction projects across NSW. 

Strata Renewal Process Reforms under the 2023 Amendment

Prior to the Amendment

• Strata Renewal Committee Tenure: Currently, the tenure of the strata renewal committee is limited to one year.
• Lack of Conflict of Interest Provisions: There are no specific measures to address potential conflicts of interest in strata renewal schemes, leading to instances of manipulation for commercial gain.

Changes Introduced by the Amendment Bill

• Extended Tenure: The proposed amendments extended the tenure of strata renewal committee to two years, allowing for more comprehensive planning and execution.
• Mandatory Conflict of Interest Disclosures: All owners will be required to disclose any direct or indirect financial or other interests in a strata renewal proposal at critical decision-making stages. This measure is designed to ensure transparency and fairness throughout the renewal process.
• Land and Environment Court’s Role in Conflict Consideration: The Land and Environment Court will have to consider potential conflicts of interest in both strata renewal applications and objections before issuing an order. This will ensure that all interests are appropriately represented and considered in the court’s decision-making process.
• Amendments to Section 188 Regarding Costs: The bill amends Section 188 to clarify that the court will have the power to award costs against dissenting owners who act unreasonably, including those with conflicts of interest that render it inappropriate for the owners’ corporation to bear their costs. The court can order such owners to pay their own costs and contribute to the levy for a portion of the proceeding’s costs. The costs order available to dissenting owners can either be an ordinary costs order (approximately 55-75 per cent) or indemnity costs (80 per cent), as determined by the court.

Subdivisions in Strata Schemes under New Strata Laws

Prior to the Amendment

• Strata Plan of Subdivision Involving Common Property: At present, when a Strata Plan of Subdivision involved alterations to the common property, it necessitates changes to the unit entitlements for all lots within the scheme. This also includes changes to the aggregate total of unit entitlements.
• Inclusion of Lots in Schedule: The schedule of unit entitlement needs to encompass all existing lots in the scheme (excluding the lot or lots being subdivided) and the new lots being created as a result of the subdivision.

Changes Introduced by the Amendment Bill: The amendment proposes that for subdivisions involving only a small amount of common property, there will no longer be a requirement to review and alter the unit entitlements for the entire strata scheme. The significance of this amendment lies in its potential to make the subdivision process more efficient and less cumbersome, particularly in scenarios where the changes to common property are minor. By removing the need for a comprehensive review of unit entitlements in such cases, the amendment facilitates easier modifications to strata plans, thus benefitting both strata managers and owners.

Pet-friendly Living Enhancements in NSW Strata

Prior to the Amendment: The unamended Act does not specify any regulations regarding the imposition of fees, bonds, or insurance as a condition for having a pet in a strata scheme. This lack of clarity has led to an increase in such levies, acting as barriers to pet ownership within strata schemes.

Changes Introduced by the Amendment Bill: The bill explicitly prohibits owners’ corporations from charging residents any fees or bonds for keeping pets in their units. This includes preventing requirements for residents to obtain specific insurance for their pets. By removing the financial barriers and costs associated with pet ownership in strata and community land schemes, the bill seeks to make pet ownership more accessible and stress-free for residents.

Committee Governance and Accountability in Strata Schemes in NSW

Prior to the Amendment

• Removal of Committee Members: Currently, removing a committee member requires a special resolution, meaning 75% of votes.
• Appointment of Committee Members: The law does not clearly specify whether committee members could be appointed outside of AGMs.

Changes Introduced by the Amendment Bill

• Easier Removal of Committee Members: The voting threshold for removing a strata committee member will be lowered from a special resolution to an ordinary resolution. This change simplifies the process of removing a committee member who may not be acting in the best interests of the strata scheme.
• Flexibility in Committee Appointments: The bill clarifies that strata committee members can be appointed outside of an AGM.

Meeting and Participation Improvements for Annual General Meeting under the New Strata Legislation

Prior to the Amendment

• Minimum Notice Period: The minimum notice period for AGMs is seven days.
• Original Owner’s Documentation: The original owner is required to supply specified documents 48 hours before the first AGM.

Changes Introduced by the Amendment Bill

• Extended Notice Period for AGMs: The minimum notice period for AGMs will be extended from seven to fourteen days. This extension provides owners more time to prepare for the meeting and review relevant materials, facilitating more informed participation.
• Revised Documentation Requirements for Original Owners: The bill mandates that the original owner of a strata scheme, typically the developer, provide essential documents at least 14 days before the first AGM. This will ensure new owners have adequate time to review foundational documents of the scheme.

Assistance Animals Protections as per the Strata Legislation Amendment Bill 2023

Prior to the Amendment:  While there is a blanket allowance for assistance animals in strata schemes, there are no specific provisions to protect the privacy of individuals with assistance animals or for owners corporations to require proof of the animal’s accreditation.

Changes Introduced by the Amendment Bill

• Enhanced Protections for Assistance Animals: The bill specifies that by-laws cannot restrict or unreasonably burden the use of assistance animals on lot or common property. This ensures assistance animals can effectively aid residents, like guiding vision-impaired individuals.
• Privacy Considerations: The bill outlines permissible evidence types to confirm an assistance animal’s status, protecting individuals’ privacy by limiting unnecessary personal or medical disclosures.
• Evidence Requirements for Assistance Animals: Owners’ corporations is empowered ask for evidence of the animal’s accreditation under the Commonwealth Disability Discrimination Act 1992 or other relevant training, as stipulated in regulations.

Internal Funds Transfer in New NSW Strata Laws

Prior to the Amendment: When transferring money between administrative and capital works funds or covering expenditures meant for the other, rectification is required within three months. The owners corporation has to reimburse the inappropriately used fund. The owners corporation has no discretion in the matter.

Changes Introduced by the Amendment Bill: The amendment provides discretion to the owners corporation when using funds from the capital works fund for administrative expenses, or vice versa. Within three months, the owners corporation can decide whether, and to what extent, reimbursement is necessary.This amendment clarifies the debate over whether funds must be repaid within three months or if the decision regarding repayment should be made within that timeframe.

Emergency Repair Levies as per the New Bill

Prior to the Amendment: A special levy for urgent repairs is currently payable 30 days after imposition, intended for repairs “necessary to mitigate a serious and imminent threat to the health or safety of the occupants.”

Changes Introduced by the Amendment Bill: The bill proposes to shorten the notice period for levies related to urgent works to 14 days, expediting responses to serious or imminent threats to health and safety.

Multiple Quotes for Works

Prior to the Amendment: Only large strata schemes (100 lots or more) are required to obtain two quotes for works exceeding $30,000.

Changes Introduced by the Amendment Bill: The requirement to obtain two quotes for works over $30,000 is proposed to be extended to all strata schemes, not just large ones. The two quotes must also be from unrelated entities.

Consolidation of By-laws Under New Strata Laws

Prior to the Amendment: There is no provision for the consolidation of by-laws without registering changes.

Changes Introduced by the Amendment Bill: Owners corporations will be able to consolidate their current by-laws by special resolution even without registering any changes to the by-laws.

Proposed Change of Electronic Record Keeping

Prior to the Amendment: Strata schemes are required to keep necessary records and statements for at least seven years, with no mandate for electronic format.

Changes Introduced by the Amendment Bill: Six months after the amendment becomes law, specified records of the owners corporation, including strata rolls, must be kept in electronic form.

Voting in Two-lot Schemes

Prior to the Amendment: In strata schemes, the original owner’s (typically the developer) votes are reduced to one-third until they sold more than 50% of the property. This arrangement is illogical in two-lot schemes.

Changes Introduced by the Amendment Bill: The amendment specifies that the reduction in the value of a vote cast by an original owner will apply only if the strata scheme comprises more than two lots. By fine-tuning the voting process in two-lot schemes and simplifying the approach to by-law enforcement, the bill seeks to make strata living more manageable and equitable.

By-law Breaches in Two-lot Schemes

Prior to the Amendment: Two-lot strata schemes need to pass a resolution before issuing a Notice to Comply for by-law breaches.

Changes Introduced by the Amendment Bill: The amendment removes the need for a resolution before issuing a Notice to Comply in two-lot strata schemes.

Changes to Strata Schemes Development Act 2015 Regarding Compulsory Strata Management

Prior to the Amendment: Only the owners and certain other individuals, like creditors, can apply to the NSW Civil and Administrative Tribunal (NCAT) for the appointment of a compulsory strata managing agent.

Changes Introduced by the Amendment Bill: NSW Fair Trading is granted the authority to request the NCAT to appoint a compulsory strata manager in cases where a strata scheme is failing to perform its core duties due to dysfunction. Empowering NSW Fair Trading to intervene in dysfunctional strata schemes demonstrates a commitment to protecting the interests of owners and ensuring effective strata management.

Strata Legislation Amendment Bill 2023: How will it impact NSW strata schemes?

The Strata Legislation Amendment Bill 2023 marks a significant stride towards enhancing the democratic and transparent nature of strata schemes in New South Wales. For strata owners and members of owners’ corporations, the bill facilitates a more streamlined and safeguarded decision-making process in the context of strata renewal. This is particularly crucial as it empowers owners to make informed decisions about the future of their properties, especially in cases involving collective sales or redevelopment. The bill also focuses on improving livability within strata schemes. Notably, the amendments aimed at simplifying the process for keeping pets and assistance animals in strata and community land schemes reflect a commitment to enhancing residents’ quality of life. These changes are significant in the context of the increasing popularity of strata living in New South Wales, recognising the vital role pets play in providing companionship and contributing to the mental and physical wellbeing of residents.

Furthermore, the bill provides clearer guidelines and increased authority for owners’ corporations in their decision-making processes. This includes more transparent procedures for conflict-of-interest disclosures and the ability to hold dissenting owners accountable for unreasonable actions or legal costs in renewal proceedings. Additionally, the extension of the operational period for strata renewal committees from one year to two years offers more flexibility and mitigates the risk of procedural lapses in the renewal process.

Key Takeaways: New Era for NSW Strata Laws

The Strata Legislation Amendment Bill 2023 heralds a new era in the governance and management of strata communities in New South Wales. With its comprehensive scope, reforms in the bill address crucial aspects of strata living, from enhancing the renewal process and pet-friendly policies to refining committee governance and emergency repair protocols. These proposed changes reflect a deeper understanding of the challenges and opportunities within the strata landscape, aiming to foster a more democratic, transparent, and efficient environment for residents and owners who live in strata.

As we anticipate the implementation of these reforms, it’s essential for those involved in strata schemes to understand how these changes will impact their roles and responsibilities. The nuances of the new legislation may bring forth complexities that require professional interpretation and guidance. It’s crucial to stay informed and prepared to adapt to these changes to ensure compliance and make the most of the enhanced framework. Our team of strata expert are here to guide you every step of the way, as this amending bill becomes law. Get in touch with us today!